Forint Resumes Worst Emerging-Market Slide After One-Day Rebound
The forint resumed its slide after a one-day reprieve as Hungary’s government failed to quell concern it will push for lower interest rates and deepen a rift with the European Union on constitutional changes.
The forint depreciated the most this month among more than 20 emerging-market currencies tracked by Bloomberg after Prime Minister Viktor Orban called for a cut in interest rates, announced plans to convert companies’ foreign-currency loans while his lawmakers passed constitutional amendments criticized by the European Commission, the U.S. and Germany. The forint gained from a nine-month low yesterday after Foreign Minister Janos Martonyi said the Cabinet had no intention to weaken it.
“The currency market has remained under pressure primarily as a result of concerns about monetary- and exchange-rate policy,” Budapest-based analysts at Intesa Sanpaolo SpA’s CIB unit, including Mariann Trippon, wrote in a research report today. “Plans to reduce the foreign-currency-debt burden without announcing specific details of the methods to be used” are also weighing on the exchange rate, CIB said.
The forint weakened 0.4 percent to 305.27 per euro by 9:59 a.m. in Budapest, extending its slump this month to 3.2 percent, exceeding a 1.6 percent weakening of the South African rand and 1.5 percent decline of the South Korean won. Yields on the government’s 10-year bonds were little changed at 6.583 percent, the highest since Dec. 10.
Hungary’s industrial production fell 1.4 percent in January from a year ago as the country struggled to exit its second recession in four years, data from the statistics office in Budapest showed today.
Hungarian President Janos Ader will sign the constitutional amendments approved by Parliament on March 11, Ader said in comments broadcast on M1 television late yesterday, adding he’s obliged to do so “regardless of whose taste that meets or whether I like it or not.”
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